Sacramento daily record-union. [volume] (Sacramento [Calif.]) 1875-1891, 1887-08-01
THE INQUIRY.
CONTINUATION OF GOVERNOR
STANFORD'S REPLIES.
Sketch of the Testimony of f. S.
Douty-The Development
Company.

49, the replies down to that number having
been published in our Saturday edition.
i6. And the said Commission shall report in
1uIl III regard 70 all such matters aforesaid and
IN regard 10 any other matters which may be
ascertained OF come to their knowledge in re
gard TO said companies respectively on or before
Ilecember !, 1857, 10 the President of the United
states, who shall forward said report to Con
gress, with such recommendations or comments
Us he may see fit TO make IN the premises
Answcr-This question, relating as it does en-
tirely to the duties of the Commission, does not
require any answer from me.
COST OF GOVERNMENT TRANSPORTATION
AZ. The Commissioners shall also ascertain
the average cost per annum of Government
transportation in the region now traversed by
the Pacific railroads between the year 1850 and
the completion of said roads.
Answer-The average cost to the Government
per annum for transportation in the region now
traversed by the Pacific railroads between the
about $4,000 900. This does not include the cost
OF the maintenance of Government forts and
military encampments, and large number OF
troops necessary to protect the border against
the hostile Indians, which disappeared with the
advent of the railroad. Nor does it include the
expense incident to the carrying OF the mails,
munitions OF war and other matters required in
the region beyond the line of the road as in
northern Montana, Dakota; Washington Terri
tory and other points now reached by railroads
4S. And also the average cost per annun since
such completion.
Answer-As shown by the books of this
company and the receipts from the Govern
ment, it appears that the average cost per an-
mum for Government transportation over said
roads is about 81 250,0lG.
FACILITIES FURNISHED.
49. And what additional facilities have been
furnished to the Government and the people by
said roads.
Answer-It is difficult to definitely state or to
specifically point out each additional facility
lIrhi oh ha.r fnal fl,aI
and the people by the railroads 1t is matter
of history that before the construction OF the
Central Pacific Railroad, all transportation be-
tween San Francisco and New York was done
b. water.
DIsCou-T on BONDS
SO. Also to inquire what discount the Pacific
Railroad and iIs several branches were forced
to make in dispOsing of the bonds guaranteed
! by the Government, TO obtain the gold coin
which was the currency of the country through
which the greater part of the said roads pass
Answer The Central and Western Pacific
Railroads were compelled 10 pay gold coin dur
ing the progress OF construction for all wages
supplies, fuel, materials and contracts which
were payable on the Pacific coast, gold always
having been the currency of this region.
The bonds issued by the United States 10 aid
the construction of the Pacific railroads were
made payable thirty years from date, with in-
| terest at per cent. payable semiannually, the
principal and interest made pa;able in lawful
money. This during the time of the construc-
ton of the road and for some years afterwdId.
was United States currency. From these facts
the bonds have always ben known as Cur
rency Skies" and they were the only bonds
issued by the Government which could not be
redeemed by it at its option at any time before
maturity thereof have been informed and |
believe II to be true, that these are the only
bonds which the Government issued during the
civil war upon which they did not sustain Il dis
court.
We direct your attention especially to the
irredecmable character of the bonds, because
| as we will hereinafter show, the company be-
cause OF this character Of bonds, has sustained
a very great loss in being compelled to pay into
the sinking fund large sum of money from
which t1ey were getting no interest whatever
| and at they same time are compelled 10 pay in
terest on these outstanding bonds.
purit the time the company was construct
| ing its road, and at a time when il was ex.
periencing the greatest difficulty in getting the
| money to meet its obligations the Government
| securities were very much Deprecated because
| oil the existence OF the civil war. For example
| the company was compelled to dispose OF the
| bonds issued TO il by the Government at q los.
| of 81 l2O,07S %. The company is paying pei
| cent. on the bonds issued by the Government
| so that at the maturity of the bonds the com
! pany Will have to pay in round numbers 500.
600 900 for which it never received one farthing
| This is one item which must be taken into con
| sideration in estimating the cost of the roaC
| and one which is rarely recognized. Again
| the company, in selling its own first mortgage
! bonds, was compelled, by reason of the i'm
| paired value OF the Government securities, tC
| sell its own bonds at the same rate that il go
| for the Government bonds
| COMPARATIVE COST OF CONSTRUCTION.
! 81. To ascertain the comparative cost Of con
| structien of said roads as compared with what
| they would have cost with the prices of labor
| and commodities prevailing five years subse
quent to the completion of said roads
| Answer-lt is safe to say that the road cost
| more than double what it would have cost Il
! the company had taken the time allowed by the
| Acts of Congress for its completion. by reason
| OF the difference IN price OF labor and material
added to the sacrifices made by the company TO
| hurry the completion of the road.
| %. Also to inquire whether or not the Pacific
| Railroad was completed in less time than was
allowed by law, and if so, how much less time
and II the United states was benefited thereby
| Answer-Ihe act required that the road be
completed July ], 1876; the road was in fact CON
| pleted May 9. 1863, more than seven wears In
advance of the time allowed by law In thu,
| hastenlng Its completion, its cost largely ex
| ceeded what 1t would have been il it had moi
| been constructed so rapidly. and by this com.
pletlon the Cove rnm ent has been largely bene
nted. Before the expiration OF the time allowed
! for the construction of the Central and Union
Pacific roads by contract the Government had
been directly benefited 70 the extent of more
than Si76000 900, saved upon freights. mails and
| transportation of troops alone.
THE CENTRAL PACIFIC EMBARRASSED.
SO Also to inquire if either of the Pacif,
Rail old Companies has been embarrassed, and
its earning capacity impaired by antagonist,
local or State legislation.
AuSNcI-1nC Ceu raj racine RAILROAD Com
pany mas been emf arrassed and its earning ca
paeity impaired by antagonistic local and State
| legislation.
White we were trying to make financial nego.
tiations one claim that We made was based
| upon the fact that the state of California al
! lowed us Is cents ton per mile. Another was
that the United States laws allowed US to charge
any rate we pleased up to 10 per cent dividends
| thsn only Interfering in case our rates were cx
| toTtiOnate.
When the agitation against rates commenced
we had only thirty-one miles of road built
and efforts were made in the Legislature to pass
| bills materially affecting our rates. This dam
aged Us before the public. Il not only indicated
that we might have to reduce our rates put
made the future very uncertain.
81 Also to inquire if the United States. since
the Union ana Central Pacific Railroad CJm.
panies accepted the terms proposed bv Con.
sress for the construction Of the Pacific rail
| roads, has granted aid in and for building com.
peting parallel railroads TO said Pacific railroads
and, II so, TO what extent such competing lines
| have impaired the earning capacity of the Pa
cific railroads
Answer--Congress has granted aid in lands fol
building competing parallel roads 10 the Pacific
railroads. the number OF which and the extent
10 which such competing lines have impaired
the earning capacity of said Pacific railroads is
hereinafter fully set out in the statement of M
J. G. Stubbs, General Traffic Manager annexed
hereto marked Exhibit L. and made part
hereof the actual business diverted being u,t
ward of s37, 100000.
coSTRAcrs WITH BRANCH ROADS.
-, Also to inquire if the United States have
contracts with branch roads controlled by either
Of said Pacific roads for carrying United States
mails, and, If SO, what service has been per
formed by them, and what money, II any. ha.
beea paid for such service, and what remains
due and unpaid.
Answer%rhe United States Government had
contracts with branch roads controlled by the
Central Pacific Railroad for carrying United
States mail.
The Central Pacific Railroad Company con.
trelled by lease a number of branch lines prior
TO April l, 1880, from which date the lines were
leased to the Southern Pacific Company
Mails were carried by these lines for the
United States under the rules and orders OF the
Postoffice Department. No payments have beer
made for such service since 1883, at which time
but partial payments were made. The pay
ments Were withheld prior to April l. 1885, be
cause the Central Pacific Railroad COMPANY
leased the lines, and they have been withheld
since that date because the Central Pacific Rail
road Company had formerly leased the lines.
MAIL SERVICE
&C. And if the United States, by falling TO pay
for such mail services has embarrassed said
railroad companies or either Of them, in paying
their Indebtedness 10 the United States.
Answer-The United States, by falling to pay
for such mail service and other transportation
has caused an expenditure TO the Central Pacific
Railroad Company of an amount equal to inter
est on the sums retained at the rate of per cent
per annnm; that being the rate of interest paid
during the period on floating debt of the com
Psny, which debt would have been decreased